JoshuaGetting accepted into an international university to study abroad is an exciting achievement. However, with the rising costs of tuition and living expenses, financing your overseas education can feel like a daunting challenge. As a Nigerian student considering study abroad opportunities, taking out a student loan is likely one of your main options for covering educational costs.
The Basics of Student Loans in Nigeria
Before diving into specific loan programs and comparing their terms, it helps to review some basic concepts about student loans in general:
What is a student loan?
A student loan is a type of loan tailored to help students and their families pay for educational expenses like tuition, fees, books, supplies, and living costs. Student loans are usually disbursed directly to the school to pay tuition costs, with any remaining balance given to the student.
Who provides student loans?
The main providers of student loans in Nigeria include private banks, microfinance institutions, higher education loan boards, and in some cases, the federal government. We’ll cover the major lending programs later in this guide.
How much can I borrow?
Loan amounts differ based on the lender and type of program, but the general maximum for undergraduate loans in Nigeria is 3-5 million naira. Graduate and professional degree loans may allow higher borrowing totals.
Do I need a cosigner?
Most student loans in Nigeria require a credit-worthy cosigner, usually a parent or guardian, who is jointly responsible for repayment if the borrower defaults. This provides security for the lender.
When do I pay back the loan?
Student loans typically do not require any payments while you are enrolled in your academic program at least half-time. Repayment usually starts six months after you graduate, leave school, or fall below half-time enrollment status. Some loans offer a short repayment grace period as well.
How long do I have to repay?
Standard repayment periods range from 5-15 years, depending on the loan amount and program. Extended repayment options with longer timelines may be available in some cases as well.
This overview covers the essential framework for how student loans work. Now, let’s look more specifically at your main options in Nigeria for funding international education through borrowing.
Major Student Loan Programs in Nigeria
The following sections examine the most prominent student loan schemes currently available in Nigeria for studying abroad purposes:
Nigeria Education Loan Board
The Nigeria Education Loan Board (NELB) is a federal government agency that facilitates educational loans to Nigerian students. Some key aspects of NELB loans include:
- Loan amounts range from 1-5 million naira depending on course level and location
- Disbursed directly to accredited foreign educational institutions
- Requires a government employee or credit union as cosigner
- Interest rate is currently 9% annually
- Repayment timeline is three years after graduation or leaving school
- Applicants must have admission acceptance to an approved program
NELB aims to make studying abroad more accessible for middle-income Nigerian families. The board works to streamline the application process and keep interest rates relatively low compared to commercial banks. NELB funding provides a major loan option backed by the federal government.
Bank of Industry Student Loan
Another prominent national student loan program is offered through the Bank of Industry (BOI), a Nigerian development bank owned by the federal government. Notable aspects of BOI student loans include:
- Loan amounts range from 2-10 million naira depending on field of study
- Requires a parent, guardian or two third-party guarantors
- Annual interest rate of 16-18% currently
- Repayment period of up to 10 years post-graduation
- Late fees are charged for overdue monthly installments
BOI markets its loans toward vocational training as well as undergraduate and graduate degrees in Nigeria or abroad. The bank aims to support skills and workforce development nationwide. However, its interest rates are higher than alternative options.
Commercial Bank Student Loans
Major commercial banks operating in Nigeria also provide educational loans targeting domestic and international studies. Examples are loans from:
- Zenith Bank – Up to 5 million naira for overseas programs, 15% interest
- Access Bank – 2-10 million naira amounts, guarantor required, 12-16% rates
- GTBank – Tuition-only loans starting at 1 million naira, 16-18% interest
- UBA – Covers tuition, fees, living costs abroad, rates around 16-18%
Commercial bank loans usually have higher interest rates but can offer larger maximum amounts. Expect extensive paperwork and credit checks, plus full-time parental employment as a common requirement. Repayment may start earlier, within 6 months of leaving school.
Microfinance Institution Loans
For lower budgets, some Nigerian microfinance institutions (MFIs) administer small student loan programs as well. Loans from MFIs tend to be:
- Less than 1 million naira maximum amounts
- Higher interest rates around 20-25% annually
- Short 3-5 year repayment periods
- Minimal documentation and quick application processing
While MFI loans have disadvantages, their accessibility makes them an option of last resort for Nigerians seeking any funding assistance. Just be aware of the long-term costs due to high interest accumulation.
This covers the principal student loan sources available domestically. In the next section, we’ll look at alternative overseas programs worth exploring.
Studying Abroad Loan Options
Beyond taking loans solely in Nigeria, you have other borrowing possibilities directly through institutions in your desired country of study:
Foreign Government Student Loans
Some countries offer their own national student loan schemes open to international students as well. Two notable examples are:
- Canada Student Loans Program – Available to Nigerians attending eligible Canadian colleges and universities. Fixed interest rates around 6% and government-backed repayment assistance plans.
- German Academic Exchange Service (DAAD) – German government loans up to 10,000 euros per year at 0-1.5% interest for Masters and PhD programs at German schools. Repayment begins one year after finishing studies.
Programs like these provide invaluable access to interest-friendly financing backed by the host country’s government. Just be aware of stringent eligibility standards and early deadlines.
Private International Student Loans
Private lenders specializing in cross-border education loans could be an alternative if you’re declined by domestic Nigerian options. A couple to research are:
- Eduloan – Offers loans up to $75,000 specifically for international students worldwide studying in the U.S., Canada, UK, Australia, and New Zealand. Variable interest rates start at 6.5%.
- Fig Loans – P2P lender connecting qualifying international applicants directly to U.S. citizens who provide funding in exchange for repayment plus interest of 7-12%.
However, these student loans for non-citizens tend to carry higher risks and interest rates than government-backed choices. Proceed cautiously and compare all terms in detail.
School-Based Loan Programs
Some international universities have instituted their own financial assistance possibilities as well. For example:
- University of Edinburgh Postgraduate Loan Scheme – Offers up to £10,000 available to Nigerian Masters students with low 1% interest and deferred repayments.
- University of Illinois Self-Help Loan – Provides up to $10,000 U.S. dollars annually at 6% fixed rate to eligible international undergrads demonstrating financial need.
Check the financial aid websites of prospective schools directly for any loan options they administer specifically for foreign applicants. Terms are often more favorable than commercial alternatives.
This wraps up a survey of prominent student loan sources within and outside Nigeria to fund your dream of studying abroad. Now let’s compare the programs carefully.
Comparing Your Student Loan Options
When weighing different student loan possibilities, focus on key variables that impact long-run costs and repayment success:
Interest Rates
Lower is obviously better. Government-backed options like NELB loans and foreign country programs usually have single-digit fixed rates, which are much cheaper than high-interest alternatives.
Fees
Watch out for origination fees, late fees, processing charges, and other expenses that accumulate onto the total owed. Some lenders charge fees, while others do not.
Loan Amounts
Smaller loans may limit course or school choices but get paid off faster. Compare maximums to your estimated cost of attendance to avoid coming up short.
Cosigner Requirements
Loans without guarantors offer more flexibility but stricter credit/income standards. Consider backup signers ahead of time in case needed.
Repayment Terms
Longer grace and repayment periods provide more post-graduation flexibility versus shorter timelines. Understand any penalty costs for early or deferred payments.
FAQ: Student Loans in Nigeria to Study Abroad
What documents do I need to apply for a student loan?
Typical application requirements include admission acceptance letters, tuition estimates, government ID/passport copies, income/employment documentation for yourself and cosigner(s), bank statements, and signed forms authorizing the lender to access your credit history. Requirements vary by lender, so check individual policies.
How long does the loan application and approval process take?
Processing times range from 2-8 weeks on average once completed applications with all supporting materials have been submitted. Some government-backed options like NELB can take longer, up to 12 weeks. Apply early since deadlines often fall months before your planned program start.
When will I get loan funds after approval?
Most lenders will disburse loans in at least two installments – one portion at the beginning of each academic period, like semester or quarter. This could mean getting half the annual amount a few weeks before fall classes and the other half before spring. Check your specific loan terms.
What affects my interest rate on student loans?
Rates differ depending on factors like your credit history, chosen lender, loan type, presence of a cosigner, and current market conditions. Generally speaking, fixed rates tend to be lower than variable ones, and government options have cheaper rates than private alternatives. Always compare multiple offers to find the lowest cost.
How do I pay back my student loans after graduating?
Contact your lender before finishing school to set up repayment arrangements. Options include automatic debits from your bank account each month, applying for income-based plans tying your payment to earnings, or prepaying some each period to save on long-term interest costs. Repayment assistance programs should also be explored if needed down the line.
Please reach out if any other questions arise during your application and study abroad process. Wishing you all the best in your academic and career pursuits going forward!
Joshua